Scandals Have a Silver Lining

How fitting that, since we've spent months reporting on the terrible consequences of the recent massive accounting scandals -- the end of the profession's era of self-regulation, the beginning of government oversight, the destruction of what was once a highly respected accounting firm, and the bruised reputation of accounting as a whole, not to mention the damage done to investors and the people who worked at the implicated companies -- that it appears it is now our fate to report the upside of those same events.

The so-called silver lining of the cloud that hung over the profession in the aftermath of the implosions at Enron, WorldCom and others and the demise of Andersen has appeared. A report by the Bureau of Labor Statistics concluded that the same accounting trickery that brought down several corporations is creating long-term job security for CPAs.

In its 2004-05 Occupational Outlook Handbook, the BLS concluded that the profession’s overall employment prospects in the coming years will be favorable because “increased scrutiny of company finances will drive growth of accountants and auditors” over the next few years.

The scandals added to accountants' lexicon an acronym that is probably rivaled in its frequency of use only by the letters CPA -- SOX. Perhaps after a look at the BLS research, the profession will find a new appreciation for those much-feared and loathed letters, since the BLS said the changes that the law spurred -- including increasing penalties and making company executives personally responsible for falsely reporting financial information -- should create opportunities for accountants and auditors, particularly CPAs, to more thoroughly audit financial records. The report also predicted increased demand for internal auditors and government accountants to serve as watchdogs and for forensic accountants to detect illegal financial activity by individuals, companies and organized crime rings.

Of course, there is a caveat -- since the legislation bars accountants from providing most non-audit services to audit clients, the BLS noted that demand may slow for financial management and consulting services by accountants.

Still, the BLS report joins a list of subsequent bright spots resulting from the scandals: audit fees are up, many accounting firms are touting a long overdue back-to-basics mentality, and some of the proverbial "bad apples" who were spoiling the bunch are being held accountable. And let's not forget perhaps the greatest impact of the scandals: They made accounting sexy -- something the profession itself had tried -- and failed -- to do for decades.

Hopefully, all of those factors together will reverse a trend we were reporting on a lot before the scandals surfaced -- the downtrend in the number of students entering the profession. That would really be a silver lining.